Liquor licenses: Wait or pay plenty

Allotment of 105 licenses by state law will be filled next month

Nov. 6, 2013

Erin Gunn makes a drink Tuesday at Beef O'Brady's in Sioux Falls. The restaurant is one of the latest in Sioux Falls to receive a liquor license. Restaurants pay a one-time fee of $260,000 for a liquor license and an annual fee of $1,500. / Emily Spartz / Argus Leader

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Types of liquor licenses for bars and restaurants

Retail liquor

TYPE OF ALCOHOL: Beer, wine and liquor SPECIAL RESTRICTIONS: Must be consumed on site The city may issue 105 licenses at a given time COST: $192,605 application fee, then $1,500 per year Full-service restaurant

TYPE OF ALCOHOL: Beer, wine and liquor SPECIAL RESTRICTIONS: Must be consumed on site The restaurant must make at least 60 percent of its sales from food and nonalcoholic beverages. COST: $260,245 application fee, then $1,500 per year Malt beverage

TYPE OF ALCOHOL: Beer and wine coolers SPECIAL RESTRICTIONS: May be consumed on site or sold to go. COST: $345 per year Retail wine

TYPE OF ALCOHOL: Wine SPECIAL RESTRICTIONS: Unopened bottles can be sold to go. Partially consumed bottles may be carried out under certain circumstances Cost: $545 per year, $500 if applied along with malt beverage license Malt beverage/ South Dakota farm winery

Type of alcohol: Malt-based based beverages, including some malt based wine coolers and South Dakota Farm Wines SPECIAL RESTRICTIONS: Cannot serve other types of wine COST: $345 per year

Liquor license waiting list

Applicant

Proposed address

R. Keith McGuire

918 W. Sixth St.

Ted J. Thoms

Southwest corner of 12th and Sertoma

Genna K. Terveer

4601 E. 41st St.

Larry Michael Lang

2520 S. Louise Ave.

Doug Hendriks

Louise Avenue

Paul Hegg

TBD

Keith and Pam Myrmoe

3221 S. Carolyn Ave.

Mark D. Fonder

TBD

Dan Grider Jr.

2304 E 10th Street

Lloyd Solberg and/or Jayne Solberg

Redstone Village restaurant

Pamela Greene

TBD

Rory Kelly

TBD

Sanford Frontiers

Sanford Pentagon

Source: City of Sioux Falls

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Liquor licenses in Sioux Falls are in short supply, despite changes in state law meant to address the needs of growing cities.

All of the retail liquor licenses allocated to Sioux Falls are about to be spoken for. That means new bars and restaurants either can get on the waiting list — which currently numbers 13 applicants — or pay top dollar if they want to sell booze.

An Irish-themed restaurant set to open downtown early next year will be one of the last to receive its license when it comes before the City Council this month. Bogtrotters Pub, Grub and Tap owner Paul Saxton said he was lucky to have his restaurant moved off the waiting list when he applied a week and a half ago.

No liquor license would have meant redrawing plans for his business. There is no limit on licenses for those who want to sell only beer and wine.

“We were going to do a proper, traditional Irish pub, and it would be hard to do that without the Irish whiskies,” he said.

Two other applicants are going through the process. If approved next month, that will be the last of the 105 licenses the city is allowed to hand out under state law.

Along with Bogtrotters, the most recent restaurants to receive their licenses were The District, an entertainment venue opening Friday at The Empire Mall; Beef O’Brady’s, which opened Oct. 1 at the Sanford Sports Complex; and Quaker Steak & Lube, which is under construction at Louise Avenue and 74th Street.

Rory Kelly, part owner of Beef O’Brady’s, said his group had been on the waiting list for a while. Plans started six months to a year ahead of time, he said. The license was approved about a month before opening.

Beef O’Brady’s also is in charge of concessions at the Sanford Pentagon. Sanford Health is awaiting its own liquor license for the sporting facility.

The cap on licenses has the potential to change as the city grows. This year, though, the number of licenses remained at 105. It will be another two years until the city checks in with its population estimate again.

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A secondary type of liquor license is available, however.

Five years ago, Sioux Falls created a license for full-service restaurants. It’s available only when the others run out.

The restaurant license comes with the requirement that the establishment gets most of its business from selling food rather than alcohol. In that way, there’s a limit on the number of bars that might serve only snacks or pub fare.

The restaurant license also is more expensive. Applicants pay $192,360 for the regular retail liquor license. The restaurant license application fee is $260,245.

That’s a one-time fee. Both come with an annual renewal fee of $1,500.

Saxton said the fees limit the number of bars, but that’s not a bad thing. He said the system seems to be working.

“It doesn’t feel like Sioux Falls has a shortage of liquor licenses because of that system,” he said. “If they were widely available, it would cause quite a bit of headache and havoc.”

The city is more lenient with bars and restaurants that want to sell only beer and wine. There is no limit on the number of licenses, and the fee is $345 for beer and $545 for wine.

For those that want to sell hard liquor, there are other options.

One is paying $1,500 to get on the waiting list for a regular retail license.

Ted Thoms of Thoms Company Real Estate is No. 2 on that list. He reserved his spot there years ago for a property on the southwest corner of Sertoma Avenue and 12th Street.

He didn’t have a specific project in mind, he said, and the property has since been sold. He said he left his name on the list in the event that another opportunity came up.

Another option is seeking out one of the 105 licensees and conducting a private sale.

It happens from time to time when a business is sold. The city only gets involved in formally transferring the license.

Even a business that closes can hold on to its license for a while. If it’s unused for two years, the owner must forfeit the license.

That was the case this summer. A license that had been held by the owners of El Corona, a bar that burned down a few years ago, hadn’t been used in two years, said Jamie Palmer, the city’s licensing specialist. It was transferred to the owners of the Original Pancake House on 41st Street.

Tuesday was the deadline for current establishments to renew their licenses. Those will keep trickling in until the end of the year, and Palmer doesn’t expect anyone to let one lapse.

This isn’t the first time the city has hit its limit for liquor licenses. Between 2001 and 2005, the city sold all licenses it had available.

At that time, the city would have had to wait to increase its number of licenses until population numbers came out from the next census, which was five years off.